T. Rowe Price’s 1Q profit up, but less than predictions

James A.C. Kennedy, CEO of T. Rowe Price

By the end of its first month as a publicly traded company in April 1986, T. Rowe Price Group Inc., the asset manager had $21 billion in assets under management and 630 employees.

Now, 25 years later, the company founded by Thomas Rowe Price Jr. in 1937 has more than 5,100 employees and a record $509.9 billion in assets under management. On Thursday, Baltimore-based T. Rowe Price reported first-quarter net revenue of $682.4 million and net income of $194.6 million, with diluted earnings per common share of 72 cents. Net revenue was $556.2 million in the first quarter of 2010 and net income was $153 million.

Investment advisory revenue also increased 25 percent compared to the first quarter of 2010. Average mutual fund assets under management in the first quarter of 2011 were $292 billion, an increase of 23 percent compared to the first quarter of 2010. Mutual fund assets for the first three months of 2011 were $300.2 billion, an increase of $17.6 billion since the end of 2010.

“It was a good, solid quarter for us,” said CEO James A.C. Kennedy. “The long-term numbers continue to do well, and our clients have enjoyed the benefits of that and rewarded us by entrusting more of their money with us.”

But the performance came up short of what analysts polled by Thomson Reuters had predicted, which was 75 cents per diluted share. T. Rowe does not release earnings guidance to analysts. As a result, shares of T. Rowe Price closed at $64.08, down $2.29, or 3.45 percent.

The silver anniversary also gave the company the chance to reflect on another highlight. Of the 630 employees with T. Rowe Price on the first day of trading, 101 — including Kennedy — are still with the company. Kennedy said that longevity underscores the priority the company puts on its employees.

“It’s all about people and processes,” Kennedy said. “How do you perform for the clients? You hire and retain top talent, and that has always been our focus.”

Company executives even turned down a chance to head to Wall Street to ring the opening of trading bell this month. Instead, T. Rowe threw parties to celebrate the employees who had been there since April 1986.

“I didn’t need another trip to New York for a photo op,” Kennedy said in an interview. “We’d rather be here celebrating the people who have been with us for 25 years — that’s the right commentary for the culture of our company.”

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